GENEVA, SWITZERLAND – The European Union parliament in the late hours of Wednesday agreed to cap bank executives’ bonuses at no larger than their fixed annual salaries, with rare exceptions. The move comes just four days before Swiss voters decide on the hotly debated Minder Initiative, sometimes called the “rip-off” initiative, in a referendum.

The EU decision would therefore cap compensation at twice the fixed salary, as opposed to today’s bonuses which are often several times the base salary.

The Minder vote is now being closely watched as part of the European public’s signal to the corporate world about what it will tolerate in the wake of the 2008 economic global crisis and public perceptions that those running companies were grossly overpaid. It covers far more than the EU parliament’s move, which limits compensation packages only, and only in the banking industry.

The Minder item on the ballot would give investors greater power than they now have, allowing them to vote each year on remuneration for members of the board and senior management, to approve board and senior managers individually rather than as a group proposed by the board (Ed. note: it does not provide for salary caps, as has been mis-reported a number of times). Investors would be able to vote electronically without being physically present. Transparency is a key feature of the initiative, with loans and pensions becoming public knowledge and the end of departure compensation such as golden handshakes and parachutes.

The EU vote late Wednesday limits compensation packages for banks in the EU, but it also covers foreign banks’ operations in the EU and EU banks’ operations elsewhere.